Ann: Half Yearly Accounts , page-20

Hi KSS,

Whatever the downrampers state, it's no doubt these guys always keep eyes on CTO's development, and wanna buy back at lower SP.

Yes, the slow progress is disappointed, however no one can deny that half year result is excellent--$4.9 million gross profits,which represent that CTO starts to get positive cash flow. You will never find another gold miner in AUS who can make such profits by production of 4,789 ounces gold. Gross profit margin is $1000/ounce.

As for the production rump up, I believe the following statement by the company is true and reasonable.

"the valuable knowledge gained at Imperial, and originally through the earlier Central underground exploration, now gives the company sufficient understanding and knowledge to provide a very solid platform to ramp up production."

"With development well advanced, Citigold could in the near term commence the major expansion of the Imperial mine and Central mine. Once the development phase is completed, Citigold is anticipating producing 320,000 ounces of gold per annum. This is a big goal for a large gold mine based on the large high-grade resource."